--- title: "Burn Rate and Runway, Definition | MedTech Terms" description: "Monthly net cash consumption (burn) and months of cash remaining (runway). Plain-English Investment & Finance definition for MedTech teams, with examples and re" lang: en json-ld: | { "@context": "https://schema.org", "@graph": [ { "@type": "DefinedTerm", "@id": "https://medtechterms.com/terms/burn-runway#term", "name": "Burn Rate and Runway", "description": "Burn rate is the net monthly cash outflow; runway is cash on hand divided by burn rate, indicating how long a company can operate without additional financing or revenue.", "url": "https://medtechterms.com/terms/burn-runway", "termCode": "burn-runway", "inDefinedTermSet": { "@type": "DefinedTermSet", "name": "MedTech Terms", "url": "https://medtechterms.com/terms" } }, { "@type": "Article", "@id": "https://medtechterms.com/terms/burn-runway#article", "headline": "Burn Rate and Runway", "description": "Monthly net cash consumption (burn) and months of cash remaining (runway).", "url": "https://medtechterms.com/terms/burn-runway", "mainEntityOfPage": { "@type": "WebPage", "@id": "https://medtechterms.com/terms/burn-runway" }, "about": { "@id": "https://medtechterms.com/terms/burn-runway#term" }, "articleSection": "Investment & Finance", "inLanguage": "en", "keywords": "Burn Rate and Runway, Investment & Finance, medical device, MedTech", "author": { "@type": "Person", "name": "Christian Espinosa", "jobTitle": "Founder, Blue Goat Cyber", "url": "https://bluegoatcyber.com" }, "publisher": { "@type": "Organization", "name": "MedTech Terms", "url": "https://medtechterms.com" }, "isPartOf": { "@type": "WebSite", "name": "MedTech Terms", "url": "https://medtechterms.com" }, "datePublished": "2026-05-05", "dateModified": "2026-05-05", "citation": [ { "@type": "CreativeWork", "name": "Silicon Valley Bank Healthcare Reports", "url": "https://www.svb.com/trends-insights/", "publisher": { "@type": "Organization", "name": "SVB" } }, { "@type": "CreativeWork", "name": "PitchBook - MedTech Coverage", "url": "https://pitchbook.com/news/articles/topic/healthtech", "publisher": { "@type": "Organization", "name": "PitchBook" } }, { "@type": "CreativeWork", "name": "NVCA Model Documents", "url": "https://nvca.org/model-legal-documents/", "publisher": { "@type": "Organization", "name": "NVCA" } } ], "mentions": [ { "@type": "DefinedTerm", "@id": "https://medtechterms.com/terms/term-sheet#term", "name": "Term Sheet", "url": "https://medtechterms.com/terms/term-sheet" }, { "@type": "DefinedTerm", "@id": "https://medtechterms.com/terms/tranched-financing#term", "name": "Tranched Financing", "url": "https://medtechterms.com/terms/tranched-financing" } ] }, { "@type": "BreadcrumbList", "itemListElement": [ { "@type": "ListItem", "position": 1, "name": "Home", "item": "https://medtechterms.com/" }, { "@type": "ListItem", "position": 2, "name": "Terms", "item": "https://medtechterms.com/terms" }, { "@type": "ListItem", "position": 3, "name": "Investment & Finance", "item": "https://medtechterms.com/terms?cat=Investment%20%26%20Finance" }, { "@type": "ListItem", "position": 4, "name": "Burn Rate and Runway", "item": "https://medtechterms.com/terms/burn-runway" } ] }, { "@type": "FAQPage", "@id": "https://medtechterms.com/terms/burn-runway#faq", "mainEntity": [ { "@type": "Question", "name": "How does burn rate impact a MedTech company's ability to maintain regulatory compliance?", "acceptedAnswer": { "@type": "Answer", "text": "A high burn rate without corresponding revenue or financing can deplete a company's funds, making it difficult to maintain robust quality systems, conduct necessary post-market activities, and address regulatory requirements effectively. 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Burn Rate and Runway [All terms](/terms) Investment & Finance [Startup Lifecycle](/ecosystems/startup-lifecycle) # Burn Rate and Runway Monthly net cash consumption (burn) and months of cash remaining (runway). Reviewed by [Christian Espinosa, Founder, Blue Goat Cyber](/authors/christian-espinosa) Last reviewed May 5, 2026 ## Definition [Burn rate](/terms/burn-rate) is the net monthly cash outflow; [runway](/terms/runway) is cash on hand divided by burn rate, indicating how long a company can operate without additional financing or revenue. What the regulation says While " [burn rate](/terms/burn-rate)" and " [runway](/terms/runway)" are not explicitly defined in MedTech regulations like the EU [MDR](/terms/mdr-reporting) or FDA 21 CFR, financial stability, directly impacted by these metrics, is an implicit expectation for manufacturers to ensure sustained compliance and product availability. Adequate funding is crucial for maintaining quality systems (e.g., as per 21 CFR Part 820, [ISO 13485](/terms/iso-13485)) and for executing [post-market surveillance](/terms/post-market-surveillance) activities, clinical follow-up, and timely recall procedures. Regulatory bodies expect manufacturers to have the resources to meet ongoing regulatory obligations for the entire lifecycle of their devices. ## What this means in practice MedTech [runway](/terms/runway) planning typically targets 18–24 months to reach the next value-inflection milestone (clearance, clinical readout, reimbursement decision) before re-financing. ## Examples - A startup MedTech company calculates its burn rate to determine if it has sufficient funds to complete a pivotal clinical trial required for FDA premarket approval (PMA). - A small MedTech firm uses its runway calculation to plan for the resources needed to implement changes to its quality management system mandated by ISO 13485:2016. - Before an audit, a MedTech company reviews its financial projections to confirm it can support the ongoing post-market surveillance activities required by the EU MDR Article 83. Common pitfalls - • Underestimating the financial resources required to achieve regulatory milestones, such as obtaining FDA clearance or CE Mark, can lead to project delays or failure. - • Failing to allocate sufficient budget for ongoing quality system maintenance, post-market surveillance, and potential regulatory audits can result in non-compliance. - • Ignoring the financial impact of unexpected regulatory inquiries, Notified Body audits, or product recalls can deplete a company's runway prematurely. - • Assuming that initial regulatory approvals guarantee continuous market access without considering the costs of maintaining compliance in a dynamic regulatory landscape is a common oversight. - • Lack of financial planning can jeopardize a company's ability to implement corrective and preventive actions (CAPAs) effectively, impacting patient safety and regulatory standing. ## Frequently asked questions How does burn rate impact a MedTech company's ability to maintain regulatory compliance? A high [burn rate](/terms/burn-rate) without corresponding revenue or financing can deplete a company's funds, making it difficult to maintain robust quality systems, conduct necessary post-market activities, and address regulatory requirements effectively. Insufficient funds can lead to shortcuts that compromise compliance. Why is runway important from a regulatory perspective? Are there specific regulatory requirements related to financial stability for MedTech companies? ## Related terms Grouped by theme ### Editor's picks · Hand-selected related concepts [ Investment & Finance Term Sheet Non-binding outline of the key economic and control terms of an investment. ](/terms/term-sheet)[ Investment & Finance Tranched Financing Financing committed in stages tied to predefined milestones. ](/terms/tranched-financing) ### More in Investment & Finance · Same category [ Investment & Finance 409A Valuation An independent fair-market-value appraisal of common stock used to set tax-compliant strike prices for employee stock options. ](/terms/409a-valuation)[ Investment & Finance Anti-Dilution Protection Adjustment that protects investors if the company raises a future round at a lower price. ](/terms/anti-dilution)[ Investment & Finance Bridge Round Interim financing between priced rounds, usually convertible. ](/terms/bridge-round)[ Investment & Finance Burn Rate Rate at which a company spends cash, typically expressed monthly. ](/terms/burn-rate) Cited by Where this term appears across MedTech Terms. Ecosystems (1) - [Startup Lifecycle](/ecosystems/startup-lifecycle) ## Primary references 3 sources Link health: 3 verified · last checked 2026-06-20 SVB· 1 PitchBook· 1 NVCA· 1 1. [1 Silicon Valley Bank Healthcare Reports Verified SVB · svb.com ](https://www.svb.com/trends-insights/) 2. [2 PitchBook - MedTech Coverage Verified PitchBook · pitchbook.com ](https://pitchbook.com/news/articles/topic/healthtech) 3. [3 NVCA Model Documents Verified NVCA · nvca.org ](https://nvca.org/model-legal-documents/) Inline markers like \[1\] jump to the matching reference above. Sponsor note ### Diligencing a MedTech cybersecurity posture? Blue Goat Cyber supports investors and acquirers with cybersecurity diligence on connected MedTech assets. [Book a 30-minute discovery session](https://go.bluegoatcyber.com/meetings/blue-goat-cyber/discovery-session) - No obligation - Expert-led from minute one - NDA available on request MedTech Terms is a community resource sponsored by [Blue Goat Cyber](https://bluegoatcyber.com). Definitions are independent of any vendor. On this term Category Investment & Finance Sources 3 Updated 5/5/2026 [Compare with another term](/compare?a=burn-runway) Learn in 60 seconds Card Lesson Quiz Monthly net cash consumption (burn) and months of cash remaining (runway). - · MedTech runway planning typically targets 18–24 months to reach the next value-inflection milestone (clearance, clinical readout, reimbursement decision) before re-financing. Remember this Watch out: Underestimating the financial resources required to achieve regulatory milestones, such as obtaining FDA clearance or CE Mark, can lead to project delays or failure. Related terms - [Term Sheet ](/terms/term-sheet) - [Tranched Financing ](/terms/tranched-financing) You may also need Auto-suggested from Investment & Finance and shared keywords. - [Runway ](/terms/runway) - [Burn Rate ](/terms/burn-rate) - [409A Valuation ](/terms/409a-valuation) - [Mergers and Acquisitions(M&A) ](/terms/m-and-a) - [Pre-Money Valuation ](/terms/pre-money-valuation) - [Bridge Round ](/terms/bridge-round) [All Investment & Finance terms](/terms?cat=Investment%20%26%20Finance) MedTech Terms An authoritative, plain-language reference for the regulatory, quality, cybersecurity, and software terms that shape modern medical devices. 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